Archives For Money

By Eric on May 22, 2014 10

I know she’s only two, but I just couldn’t wait any longer. I’ve wanted to try giving Rooney a commission for helping around the house for awhile, but wasn’t quite sure how to approach it. But, after reading Smart Money Smart Kids (affiliate link) by Dave Ramsey and Rachael Cruze, I had a few tactics in my tool belt.

I may have jumped the gun with a 26 month old (I’m really trying to just call her a 2 year old, but it’s hard! She’s developed so much in the past two months!). But a few weeks ago we were sitting in her room playing and waiting for Kelsey to finish getting ready before heading out the door. Rooney’s room looked much like this photo…

child commission

 

The Work

I’d had enough of stepping around, over, and on her toys and decided it was time we taught her how to pick up. That and I know that she’s a great helper at daycare when it’s time to pick up, so it’s certainly time for those good habits to be reinforced at home. I didn’t tell her I was going to pay her, because I wanted the money to be a reward itself.

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By Eric on May 20, 2014 +

Having focused intensity in our personal finances was one of the toughest things to do when we were first starting to figure out our budget. All of the “what ifs” would creep into our minds and we’d wonder if we were doing the right thing.

For 23 months we made paying off our debts a priority, and as we increased our focus on it, our debt-free date got closer and closer. The reason I say increased, is because, there were a lot of things we could have done right away, but were hesitant to do like…

Of course, there are countless other ways we slashed expenses within our budget during that time as well, but those came down to prioritizing, and changing spending behaviors like: avoiding Target.

As we got a few months into our debt snowball, we kept weighing the options on the above list and calculating our debt-free date if we took action on each of them. That was when things really started accelerating.

Each item came with it’s own amount of emotional struggles, but we didn’t realize the emotional swing we would feel when we applied those things to our debt. The more we focused, the more we hated the debt and the bigger priority it became.

not contributing toward retirement

But I always wondered what not contributing toward retirement for that short time was costing us in the long run. I never ran the numbers because I was scared to see it and we were just THAT focused on paying off debt at the time. So, let’s take a look at some numbers, shall we?

Cost of Not Contributing Toward Retirement

There are a multitude of factors that would go into this calculation, so I’m going to use some simple round numbers to paint this picture. Every financial situation is different, so if you are considering this, it’s best to run the numbers for your specific scenario. Also, we didn’t pull any money out of our retirement accounts, we simply stopped contributing into them. The money in there already stayed and grew in our account during that time.

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By Eric on May 15, 2014 5

Time is money, right? We spend time making money, and we spend money making the most of our time away from making money. Confused yet?

time is money

Time and money have many similarities and a few differences in how they affect our lives. Understanding and making the most of both time and money can lead toward some very positive results. And opposite on the flip side.

Close Relationship

  • Finite: We will only live for so long. We will only make so much money while we’re alive.
  • Unpredictable: When trying to manage both time and money, unpredictable things can and will happen. There will always be things we spend our time and money on that we may not want to. Cleaning the house for example. Not my favorite thing to do, but I either do it (time) or pay someone else to do it (money).
  • Exchange: Time and money often work together in situations where we trade time for money (like the example above).
  • Calendar/Budget: We put events on our calendar so that our time is allocated and we know where we need to be and when we need to be there, so that we don’t miss a meeting. In the same way we can budget our money, making a plan for when and where it will all be spent so that we don’t miss a payment, or a birthday.

Distant Relationship

  • Creating/Earning: Essentially, money can be created, or more of it can be earned. There’s not really that option with time.
  • Level Playing field: Everyone has the same amount of hours in the day. 24 hours is all we get. How we spend them (for the most part) is up to us.

How Time and Money Work together

Time and Money can  work together to create value, especially in our economy as it is today. Because of inflation, the same amount of money today (say $20) if buried in your back yard, will not be worth the same amount ($20) five years from now.

Inflation has risen by an average of 3.22% since 1913. Which means that the value of the money in your back yard won’t stretch as far when you dig it up in five years. And it’s why we hear about the term “return on investment” all the time. At minimum we want to break even on our investments in the long run, which means earning at least 3.22%.

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By Eric on May 13, 2014 8

Ah, the tax refund… seems like such a good thing right? We lend the government our money throughout the year, they over-spend it, then send it back to us the following Spring. While taxes are a certainty in our culture, we try to reduce our refund as much as possible by adjusting our withholdings at work, but that can be tricky too.

Tax Refund 2014

Having a baby kind of through things off in 2012 (in a good way), but I think we’ve settled into a sweet spot for now when it comes to filing our taxes. In 2013 we pretty much broke even. We had been socking away a good portion of money that our online efforts were bringing in, knowing we’d have to pay taxes on those dollars, which left us with a good bit in set aside.

That process was based on our tax situation from 2012 and our friend Mary (CPA) gave us some guidance on how to approach saving to pay for taxes on that extra non-taxed income. So we simply took a cut off the top of whatever came in each month and set it aside to pay for taxes when the time came.

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By Eric on May 8, 2014 5

Is debt really that bad? Why is debt bad? What’s the point of paying off debt? All valid questions that need to be answered before getting serious about moving forward toward other important financial goals. Important financial goals is a relative term for which you’ll have to look inside yourself to find the answer. But I’ll provide a few scenarios for context. Perhaps you’re wanting to make it through one of these scenarios…

  • Have children and either mom or dad wants to stay at home with the kids.
  • Transition jobs, but are afraid of backsliding financially.
  • Dream of starting your own business, but the financial startup is too much to think about.
  • Want to give to worthy causes, but always feel insecure that the money you are giving will be needed to keep the lights on next month.

Definition of Debt: something that is owed or that one is bound to pay to or perform for another. Take a deep breath and read that definition again. Something that is owed or that one is bound to pay to or perform for another. That’s not fun in anyway. The only fun is the moment in which our desires are satisfied by the “thing” that we’re willing to go into debt for.

Debt makes life blurry

Another way to put it: The rich rule over the poor and the borrower is slave to the lender. - Proverbs 22:7

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